Ethereum
Ethereum ETFs See Declining Interest: What Does This Mean for the Future?
- The decline in ETH on-chain volume indicates a decrease in interest ahead of the ETF verdict.
- One financial institution predicted a delay for the Ethereum ETF, but not an outright rejection.
Some major events are expected to take place before the end of May. But if there is one that the crypto community places at the top, it is the decision of the American SEC on the numerous Ethereum [ETH] ETF apps.
ETF stands for Exchange Traded Funds. Unlike normal cryptocurrencies like ETH, an Ethereum ETF would only expose investors to the altcoin, without them directly owning it.
But whether this will happen remains a big subject of debate. For some, the SEC has no choice but to approve it, since it has given the green light to Bitcoin ETFs.
A stumbling block appears
However, others believe that recent developments indicate that the regulator do not share this point of view. Gary Gensler is a notable figure who could hinder the approval of the Ethereum ETF.
For some time now, Gensler, Chairman of the SEC, has publicly stated his dislike for the crypto ecosystem. Recently, the SEC issued well notices to certain companies, including Consensys.
A Wells Notice is a formal SEC notice written to notify a recipient that the agency is considering taking enforcement action against them.
Consensys is a blockchain software company developed to become an Ethereum knowledge hub. Given that the company has ties to Ethereum, it is possible that the SEC will say a big no to the applications.
However, JP Morgan had a contradictory thought on this matter. Although the company said it did not expect approval this month, it noted that it would not be an outright rejection. He explained that,
“Markets do not expect approval by this month, as suggested by the significant reduction in net asset value by the Grayscale Ethereum Trust ETHE.”
The SEC has a deadline between May 23 and 24 to make a decision. However, it seemed that the market as a whole was skeptical about the good news coming from this development.
Interest in ETH decreases
This was evident in the series of exits Ethereum investment products reported by AMBCrypto. In terms of volume, we evaluated on-chain volume.
At the time of writing, the volume was 11.17 billion. This is a significant decrease from the peak in March. The decline in ETH volume is a sign that market participants are losing interest in the altcoin.
Source: Santiment
If the SEC approves the Ethereum ETF, the price of ETH could also be affected. At press time, the price of ETH was $2,910. A green light could send the cryptocurrency as high as $3,500.
But if this is not the case, the potential drop to $2,700 could happen. However, eyes would be on two major applications, which come from VanEck and ARK.
Candidates fill in the gaps
Previously, ARK and 21 stocks, which have a joint application, included staking in their Ethereum ETF filing. But in a modified presentation on May 10 they changed it.
The companies hoped staking would be included and added it as a feature in February. The reason for this inclusion was that ETH could have been part of the company’s revenue.
But the fact that the SEC is still having issues with whether or not to qualify cryptocurrency as a security has left it with no options to be on the safe side. However, this does not imply that the Ethereum ETF gets a green light.
Meanwhile, JP Morgan also commented on the possibility of a delay.
Depending on the financial institution, a refusal could result in lawsuits, similar to how Grayscale took the regulator to court before Bitcoin ETFs were approved.
Read Ethereum [ETH] Price prediction 2024-2025
Indeed, Grayscale had also requested to convert its Ethereum Trust into an ETF. The point of view read,
“The model is likely to be similar to that of bitcoin: with futures-based Ethereum ETFs already approved, the SEC (if it denies approval of spot Ethereum ETFs) is likely to face a challenge judicial and possibly lose.”
Despite the expected verdict, the number of ETH Holders increased. According to Santiment, the total number of participants holding ETH exceeded 12o million.
Source: Santiment